Cash-strapped East African Portland Cement Company (EAPCC) NSE:PORT, has declared all its workers redundant in a restructuring plan expected to save the company from further losses.
A letter ‘Notice on the Intended Company Restructuring and Staff Rationalization’, from Acting Managing Director, Stephen Kyalo Nthei, to employees, the performance of the company has been declining over the last six years. As a result, it is incurring an average daily loss of KSh8 million.
Further, the company’s market share has reduced in the past three years, impacting negatively on sales and subsequent profitability.
“This may be attributed to many reasons, key amongst them being increased competition and inadequate working capital.”
Kyalo, says their resort is to restructure the plant’s operations, which will include a staff rationalisation programme to balance the institution’s running costs and levels of productivity.
“This process will, unfortunately, render jobs redundant. In the spirit of fairness and in regard of the service rendered by the affected staff, this exercise will be done within the provisions of Section 40 of Employment Act. Subsequently, all jobs will be declared redundant and all employees released in line with the restructured and leaner organisation structure,” Nthei said.
The Government also reiterates that “For the company to survive then it will have to go through the restructuring. It is a hard decision but has to be made because it is on its deathbed,” Industrialisation Cabinet Secretary Peter Munya said.
“Portland is also sitting of over 4200-acre government land issued in 1960, that was first meant for farming. We have also asked the EAPCC board to surrender it for affordable housing,” CS Munya said.
The Cement maker’s unaudited results for the period to 31st December 2018, its losses widened by 30.7% to KSh1.26 billion.
In 2017, its loss was up from KSh969.5 million reversing its June 2018 full-year profit of KSh7.79 billion attributed to booking KSh11.34 billion gain on land revaluation.